Meta uses Bain for Layoffs, Class B Share Stuff, Generative AI
Bain is in the building making layoff decisions, Meta's generative AI bets, Mark's Class B shares
Ahoy Metamates! 🚢 🏴☠️
🆕 The TLDR This Week
Facebook Parent Plans Lower Bonus Payouts For Some Staff - WSJ
Remote work is no longer available as an option in new job postings
Meta releases AI model that can identify items within images
Annual shareholder meeting coming up on May 25th
Welcome to the Hunger Games
Q1 brought us a 25% more ruthless Zuckerberg - hailing from MPK 21, he is a man on a mission to make every penny stretch as far as possible. In case you’ve survived the recent layoffs - you may still be affected by the new 2023 compensation plan… or by the new performance review system that will now happen twice a year. Only the hardened masochists will survive.
New compensation plan will apply to 2023 review cycle
A performance rating of “met most expectations” = expect a much smaller refresher
Comp multiplier to go to 65% from 85% for those who don’t exceed
2x below expectations = bye
VPs in certain orgs were recently asked to cancel travel plans and stay put at MPK. Judging by the number of Bain meetings folks are reporting on their calendars: there will be bloodletting at the mid management level M1-D2. A recent post on a public forum claims Bain is basing at least some recommendations for management layoffs based on whether folks fall within the salary band.
May the odds be ever in your favor.
How Mark Keeps His Grip Tight
Image: Live footage of analysts figuring our Meta's ownership structure
Despite the intense market turbulence in the last few years, Mark continues to steer the ship - while any other CEO would have hedge fund activists clamoring to dethrone the CEO. In fact, activists are in 1 of 4 S&P companies. But not Meta. Why? Because Mark is like the Tutankhamun of tech.
Here’s a peek of which insiders hold the most shares:
Image: Shares Held by Insiders as on Mar 31, 2023 (Value computed at price $211.94), Source: BuySell Signals.
Before you have a heart attack - it’s OK that Mark has less shares than Sheryl on this table. He has beneficial ownership in a bunch more through various investment vehicles and foundations.
👉👉👉👉 Oh yeah, and in case you didn’t know:
Zuck controls 90% of the company’s unlisted Class B shares
They have 10 votes each vs 1 vote each for the regular Class A shares that are publicly traded
A few other leaders have these special shares. To prevent them passing control, if they wake up hating Mark one day, there’s a special rule in place that once sold Class B shares immediately convert to Class A shares
So basically, everyone be damned, this is Mark’s personal company until he dies or divests
It helps to get a visual - MorningStar made a nice chart showing Mark's proxy voting power circa 2021:
What I *really* want to know, and I don’t want to be macabre here, but what does succession at Meta look like? Do Mark's Class B shares get buried with him like at an Egyptian funeral if he passes on? I haven't been able to get a clear answer on that reading any of Meta's financial statements. The show " Succession" would pale in comparison to the proxy fight that ensues if Mark steps down for any reason.
Bonus: Here’s who’s been selling stock on a 10b5-1 plan in the last 12 months, per SEC filings as of March 31, 2023.
The Second Act - Generative AI?
Analysts at Barclays are calling Generative AI Meta’s “second act” and raised their projections for the stock price by 4%. The headwinds from cost cutting are no longer the main conversation.
"We feel very confident that ... we are at the very forefront," he said. "Quite a few of the techniques that are in large language model development were pioneered [by] our teams.
"[I] expect we'll start seeing some of them [commercialization of the tech] this year. We just created a new team, the generative AI team, a couple of months ago; they are very busy. It's probably the area that I'm spending the most time [in], as well as Mark Zuckerberg and [Chief Product Officer] Chris Cox."
Translation for all of us regular people:
display ads will have a “ ask AI” option where AI can dynamically generate an appropriate image and text for each audience. Basically, the constraints in the image below will be a historical artifact pretty soon:
Next issue: Deep dive into generative AI and why I think Barclays thesis on it is flawed.
Make sure you're subscribed to read it later this week :)
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